Sift together the flour, baking powder, and salt into a bowl.
In another bowl, beat the butter and sugar with an electric mixer on medium speed for 2 to 3 minutes, or until light and fluffy. Beat in the egg and vanilla. Mix in the flour mixture until dough is smooth and firm.
Divide the dough in half and shape into two 1/2-inch-thick disks. Cover them in plastic wrap and refrigerate for 2 hours. (At this point the dough can be covered in plastic wrap, sealed in a resealable plastic bag, and frozen for up to 2 weeks.)
Preheat the oven to 350°F (177°C). Line several baking sheets with parchment paper.
On a lightly floured work surface, roll the dough to a thickness of 1/4 inch. Cut out shapes using the larger cookie cutter and then use the smaller cutter to remove “windows” from inside the shapes. Gather the scraps, reroll, and repeat with the cookie cutters. Arrange the cookies about 1 inch apart on the prepared baking sheets.
If using clear hard candies, seal them in resealable plastic bags (one color per bag). Crush the candies into very small pieces with a rolling pin, a heavy skillet, or a hammer.
Fill the cookie windows with just enough sanding sugar or crushed candy to cover the exposed surface. Use one color per cookie.
Bake the cookies for 8 to 10 minutes, or until the edges start to turn golden, rotating the sheets halfway through the baking time.
Place the sheets on wire racks to cool for a few minutes before gently transferring the cookies to the wire racks. Let the cookies cool completely.